How Health Savings Accounts -Create Better Healthcare Purchasers
by Jane Cooper

In the late 1980s and early 1990s, many expected the HMO to be the silver bullet to manage costs and improve healthcare. Employers embraced restrictive networks and capitated physicians. But HMOs struggled as employees and their families demanded more choices and fewer restrictions. HMOs and exclusive provider organizations gave way to PPOs and point-of-service plans in most markets.

However, more freedom of choice meant higher costs to employers. Providers are not as willing to negotiate significant discounts when they don’t see additional volume under a PPO or POS plan. But the employee, their spouse, and their children didn’t care about the higher costs at the time. They had a co-payment or small deductible regardless of which plan the employer offered.
The late 1990s and 2000 brought double-digit healthcare cost increases. Employers finally realized that they would have to get their employee’s attention in order to manage healthcare costs. There is no better way to get someone’s attention than through money. Employers increased deductibles and out-of-pocket costs.

Present Efforts at -Managing Healthcare Costs

Consumer driven health plans (CDHPs) all include a larger deductible and higher out-of-pocket costs than what most employees have ever seen. CDHPs that meet the federal requirement of an $1,100 individual deductible or $2,200 family deductible and $5,500 or $11,000 maximum out-of-pocket amounts, may also be offered as an option with a health savings account (HSA). An HSA allows an employee to fund a checking account through pre-tax dollars, which must be used for healthcare expenses.

The employer can choose to fund some of the large deductible for employees through their HSA accounts. Other funding options for employees can include a health reimbursement account (HRA) and a flexible spending account (FSA).
As of January 2007, more than four million people were enrolled in insurance plans that enabled them to open HSAs, according to America’s Health Insurance Plans. National penetration is approaching 5%. From 2005 to 2006, CDHP offerings rose from 12% to 22% among the largest employers with 20,000 or more employees, according to Mercer Health and Benefits.
People will not control their own health or healthcare costs unless they not have financial reasons to do so. Healthcare costs will only be affected by increasing responsibility and accountability at the individual purchaser level. This must include the motivation to make better healthcare choices.
Consumers have demonstrated that they can compare healthcare cost and quality. This is demonstrated every day for procedures like plastic surgery and Lasik surgery. We are starting to see the results of a decade of education and plan design changes focused on increasing the use of generic drugs.

How Do You Support Your Client’s CDHP Efforts?

Brokers and benefit consultants have been thrust into this new and changing area without a guidebook. Your clients are looking for your advice to increase their chance of success in implementing a CDHP strategy that lowers their healthcare costs. Employers who’ve been successful have the following:
• A frequent and multi-faceted employee communication plan – employees have to understand which behaviors employers are asking them to change, why they are being asked to change, and what’s in it for them. Communicating these messages does not happen with one e-mail. It requires repetition, multiple forms of communication, and a clear message.
• A business case for why high healthcare costs are everyone’s problem – Many employees do not understand how their lifestyles and high healthcare costs can drive up the company’s costs or that high healthcare costs mean less money for wages and benefits. Employers must be willing to talk to employees about these issues in an honest and well-planned way.
• The services of an advocacy company – Employees and their families need help navigating the healthcare system and becoming better healthcare consumers. Insurers’ websites often create more questions than they answer. An advocacy company provides people to coach and educate employees, retirees, and their families. The advocate can research the cost and quality of healthcare services and share that information with employees.
• Measurement and reporting of results to employees – Encourage your clients to report to employees on a quarterly basis about the progress the company is making to increase wellness and reduce healthcare costs. Whether the results are better than expected or fall behind expectations, shared responsibility requires ongoing information.

Using Your Expertise in CDHP to Capture New Clients

The private sector marches on while politicians debate government solutions to increased healthcare costs and the uninsured. Your clients want solutions now. As a benefit consultant, you can grow your book of business by bringing a successful CDHP strategy to prospects and clients. Just ask prospects these two questions: Do you consider a consumer-driven strategy important to your benefit strategy? What tools do you provide your employees to help them become better healthcare purchasers? Then set the appointment to outline your recommendations on both.
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Jane Cooper is the founder, president, and CEO of Patient Care, a national advocacy company that helps employees navigate the healthcare system and become better healthcare consumers. She has more than 25 years of experience in the healthcare industry and launched Patient Care in 2001 in New Orleans. Today, Patient Care serves more than 140,000 members and is headquartered in Milwaukee.